PK Partnership Budget Savings and Pensions

How to stay cool during the heatwave

Today (25 July 2019) is expected to be the UK’s hottest day on record, with temperatures of up to 39C (102.2F) forecast in southern England.

Thousands of commuters are being affected by disruption in areas where trains are running a slower speed on tracks at risk of buckling, with some rail firms advising passengers not to travel.

Here are our common sense top tips to stay cool:

Skin protection

Sunburn is a real possibility and applying the right skin protection is essential. Fair-skinned individuals should slather on as high a factor sun cream as they can get, but others cannot afford to be complacent either.

Hydration

Drinking lots of water is essential. If you’re sweating, you’ll need to keep regularly topped up on fluids in order to avoid dehydration.

Iced water is particularly refreshing during the summer and fruit juice is good too, especially as the sugars will give you a bit of an energy boost in the sapping sunshine.

Remember alcohol will not keep you hydrated, so as lovely as a cold pint is on a summer’s day, make sure you also drink water or a soft drink and don’t overdo it!

Prepare your home

If you are not lucky enough to have air conditioning at home, the summer months can be a bit of an ordeal as you try various new tactics to keep cool. Throwing open all the windows as far as they go is a good start, but unless there is a breeze in the air this isn’t likely to make a difference.

Make sure you’ve swapped your duvet to a thinner one with a lower tog rating or simply sleep with a sheet, as otherwise sleep may be hard to come by on warm nights.

Fans are essential during the summer and it is worth investing in some really high quality ones, as the cheaper ones will often only push warm air around the room and won’t provide any benefit.

Clothing

Plenty of individuals like to flash the flesh in the sun but this won’t necessarily help keep you cool. The best clothing to wear in the summer is light, breathable material such as cotton, as this will be the most comfortable when the temperatures really start to get unbearable. Wear light colours, as dark ones absorb heat.

 

Image courtesy of Flickr_Sheila Sund

Planning: The joy of tidying

Prioritise peace in your life: extend the Marie Kondo tidiness craze from your home to your finances.

Have you ever looked at a room in your home – or even at your office desk – and wondered how you accumulated so much stuff? You might well remember when you acquired each item, but the questions of why you did so and whether you still need it can be more awkward to answer. ‘Seemed like a good idea at the time’ and ‘No, not really’ could be the embarrassing truth for many of us.

What applies to the curiously coloured article of clothing or the novelty mobile phone holder can also be relevant to excess baggage in your personal finances. Working out what investments, savings and insurance cover you have, why each one is there and whether you still need it can be a daunting, but ultimately rewarding task. For example:

  • Do you have any old ISAs – perhaps they were even once PEPs – bought for their league table-topping funds and then forgotten when past performance proved to be no guide to the future?
  • Do you have cash invested in bank or building society accounts opened more than a couple of years ago?
  • Are your investment funds held on a single platform or spread across several platforms, or are any of your funds held directly with the asset managers?
  • Do you have any pension plans where contributions have long since ceased and perhaps the provider has closed to new business?

We can help create some coherence to your finances. The process can have a range of benefits, even if it is simply to bring your investment funds under a single umbrella. Charging structures now often favour bringing together holdings in one place rather than spreading them over several providers or platforms.

A consolidated approach can also make it easier to see the bigger picture and carry out any necessary adjustments. For cash deposits, Financial Conduct Authority research from 2018 showed that accounts that were more than two and half years old typically paid less than half the interest rate offered by newly opened accounts.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fi t in with your overall attitude to risk and financial circumstances.

The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.

 

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Insuring the Gumball Rally – Mykonos to Ibiza 2019

Gumball Rally

 

PK Partnership have recently arranged the insurance for many of the cars that took part in this years Gumball 3000 Rally. Registration began in Mykonos where we met with the drivers of 120 supercars!

 

As the official insurance partner to Gumball 3000, PK Partnership had quoted and put on cover many on the drivers before the start, but inevitably there were going to be a few that required last minute specialist insurance cover. The correct insurance cover is a strict stipulation for the rally by the organisers of Gumball 3000.

 

 

Aston Martin DBS PK Partnership Insurance Broker

 

As many of you will know, the cars taking part in this rally are largely high end, prestigious supercars and the most expensive car on the rally this year was a Pagani Huayra with a market value of £2.75M.

 

 

 

Document Wallet PK Partnership

 

The rally travelled through 10 countries over 3000 miles, finishing in Ibiza, with the longest day being from Porto Montengro to Venice – some 950km and 13 hours – and 950km of driving!

Our Director Amit Patel drove an Aston Martin DBS Superleggera as part of Team Blain.

 

 

 

Team

 

 

The team at PK Partnership are already planning the insurance risk aspect of next year’s rally. Stay tuned for more! You can see more photos on our Instagram page at www.instagram.com/pk_partnership

 

Image courtesy of See-ming Lee SML, Flickr

Attending Europe’s largest insurance conference

Earlier this month we attended the 2019 British Insurance Brokers Association conference in Manchester, where we met with leading insurer partners and forged many new relationships.

The BIBA conference is a great way for us to meet with specialist insurers and claims providers all under one roof to continually enhance our client offering.

The event is Europe’s largest insurance conference, entitled “Leading the Way”, and Boris Johnson was the keynote speaker on Thursday morning announcing that he will be running for Prime Minister.

Thank you to our friends at Hiscox for the evening entertainment – we are looking forward to next year’s event already!

biba amit

 

 

 

 

 

 

 

 

 

 

Director Amit Patel pictured at the entrance to the conference

 

Image courtesy of Flickr_Sheila Sund

Self-employed pensions boost

The Chancellor has abandoned plans to abolish class 2 national insurance contributions (NICs).

Those registered as self-employed pay class 2 NICs if their profits are more than £6,365 a year in 2019/20. Then if profits exceed £8,632, they also have to pay class 4 NICs.

Typically, these NICs are paid through the self-assessment system.

The planned abolition of class 2 NICs was proposed to simplify the tax system.

But there were concerns it would push up pension costs for the self-employed, particularly those on lower incomes.

For 2019/20, the class 2 NIC is £3.00 a week. Class 4 NICs are 9% of their profits (between £8,632 and £50,000 for 2019/20) then 2% of profits above this level. Paying class 2 NICs gives the self-employed access to the new state pension, which is worth up to £168.60 a week in 2019/20 – depending on their NIC record.

But relying solely on the state pension in retirement isn’t a sensible idea. It’s important to make some private pension provision as well. You won’t have the benefit of a workplace scheme or employer contributions – but that shouldn’t stop you building up your own retirement savings.

Registered pensions are a really tax-efficient way to boost your income later in life.

The Financial Conduct Authority does not regulate tax advice. Tax laws can change. The value of tax reliefs depends on your individual circumstances. The value of your investment, and any income from it, can go down as well as up and you may not get back the full amount you invested.

 

PK Partnership Budget Savings and Pensions

Travel Insurance and Sri Lanka

You may have already read that the Foreign and Commonwealth Office (FCO) advise against all but essential travel in light of the ongoing security operation and heightened risk of terrorism in Sri Lanka following the tragic attacks on Easter Sunday.

Anyone with plans of travelling to Sri Lanka in 2019 is strongly advised to contact their holidaymaker.  Given the severe travel advice warning, we suggest checking all travel insurance details.

It is always advisable to check information from the FCO web site before international travel and how this may impact your insurance arrangements.

If you have any specific queries relating to your travel insurance before travelling please do contact us.

 

Image Courtesy of Flickr_Ishan Manjrekar

Ringing the changes of the new tax year

The tax year 2018/19 ends on Friday 5 April, which means it’s time to start planning for the new tax year and tie up the loose ends of the old one.

Planning for the new tax year is now affected by the shift of the Budget schedule to autumn. The result is that changes announced in October, or in Scotland’s December Budget, have now passed into legislation in time for the new tax year. So, what does 2019/20 hold in store?

A higher personal allowance

The first £12,500 of income for most people in the UK will be free of income tax from 6 April 2019.

An increased higher rate threshold, outside Scotland The higher rate income tax threshold (the personal allowance + the basic rate band) will rise to £50,000 for England, Wales and Northern Ireland. This considerable jump of nearly 8% could mean it is worth reviewing how married couples and civil partners own their investments to ensure income falls into the right hands. In Scotland, the threshold stays unchanged at £43,430.

An increased national insurance contributions (NICs) upper threshold

The UK-wide upper threshold for full rate NICs (12% for employees) will also increase by nearly 8% to £50,000 from 6 April, potentially clawing back some, or in Scotland, almost all of your income tax savings. However, the increase does offer more scope to potentially gain benefits from salary sacrifice arrangements for pension contributions.

Personal pensions

The lifetime allowance will rise by almost £25,000, to £1.055 million, for 2019/20 – roughly enough to buy a 65-year-old a guaranteed inflation-proofed income of around £34,000 a year, based on current annuity rates. The annual allowance and its associated taper limits remain unchanged. So it’s all the more important to check whether you have any unused allowance from 2015/16 to carry forward before 6 April arrives, given you can only carry forward the previous three tax years, and the opportunity disappears.

Employer pensions

The minimum level of pension contributions for automatic enrolment increases from 6 April 2019. For employers, the minimum rate rises from 2% to 3% of ‘band earnings’ (£6,136–£50,000 in 2019/20), while employees must pay enough to bring the total up to 8% including tax relief. As the band’s upper limit has risen in line with the NIC upper threshold, there is a double sting if you earn above £46,454.

Individual Savings Accounts (ISAs)

Only the Junior ISA investment limit will increase in 2019/20, and that by only £108 per year. It will be the third successive year the overall ISA limit has been fixed at £20,000, a reminder of the wisdom of contributing as much as you can each year (including 2018/19, if you have not already done so). One popular ISA variant, the Help-to-Buy ISA, will disappear for new investors (aged 16 upwards) from December 2019.

Capital gains tax (CGT)

The CGT annual exempt amount increases to £12,000 in 2019/20. The new annual exempt amount could result in a potential tax saving of up to £2,400 (£3,360 in the case of residential property). If you have not used your 2018/19 exemption, combining the two with sales straddling the tax years could remove £23,700 of gains from tax. That might provide the funds to top up ISAs and pensions.

For more information on any of these changes please contact us now.

The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice. The value of your investment, and any income from it, can go down as well as up and you may not get back the full amount you invested. For specific tax advice please refer to your tax specialist or accountant.

 

PK Partnership cost of financial advice

Keeping your head – the psychology of investment

Understanding your personal biases can help you form investment strategies that work for you across good times and when the going gets tougher.

Traditional finance theory starts from the principle that markets and their investors are perfectly rational. A quick look around will convince you that such an idea is optimistic to say the least. Rational markets would not fluctuate without any apparent reason, nor would rational investors feel the pain of a loss over twice as much as they enjoy the feel of equivalent gains.

The field of behavioural finance, which studies the impact of investor psychology on financial decisions, has developed in response to the inconsistencies between rational theory and irrational, human, reality.

Behavioural finance can offer lessons to all investors. People can act in surprising ways in all sorts of circumstances. For instance, you might ask yourself if you recognise any of these behavioural finance biases in yourself or others:

Overconfidence Many people when asked identify themselves as ‘above average’, whether in terms of driving ability, intelligence or looks. By definition that cannot be true – no more than 50% can be above average. Overconfident investors can pay a high price to learn this truth.

Hindsight bias How many times have you heard someone say “I always knew that was going to happen” after the event has happened? Yet the same person probably never warned you beforehand. People like to imagine their predictive powers are good – and some can convince themselves their hindsight was once foresight.

Herding

“Everybody is investing in technology/emerging markets/commercial property/etc., so I will too.” It seems the easy option, not least because human beings are inherently fearful of going against the crowd. However, the crowd’s judgement is not always right. Also, if and when the crowd changes its mind, the reversal can become a dangerous stampede, especially in investment markets.

Confirmation bias

Which do you pay more attention to, the information and comments that reinforce your views or those that contradict them? The natural response is the former, something that some people on social media have learned to exploit.

However, when it comes to investment, hearing only what you want to hear could mean ignoring important if uncomfortable truths.

Self-attribution

You choose to invest in X and its value rises – that is proof of your skill. Then you choose to invest in Y and its value halves – that is just bad luck. Such a view of expertise makes us feel better about both outcomes, but it could be pure self-deception. It is also possible that the choice of X was down to luck and Y to lack of investment skill.

By developing an understanding of behavioural finance ideas, you can identify your own investment behaviours. The nearer you come to acting like a rational investor, the more you may be able to benefit from the irrationality of others.

A sensible starting point is to identify your innate biases and take advantage of the professional, objective advice we can offer when making investment decisions.

The value of your investments, and the income from them, can go down as well as up and you may not get back the full amount you invested. This article is for general information purposes only.

 

Image courtesy of Flickr_Pink Sherbert Photography

Just in case: protecting against income cuts

You may assume you’ll never need it, but if you experience redundancy or illness,

you may become eligible for universal credit. However, if you imagined that the

state would provide enough support in the event of financial difficulty due to sickness

or unemployment, it’s time to think again.

 

The government is rolling out universal credit, a new single payment system designed to replace six existing state benefits. Universal Credit is expected to be adopted nationwide by 2023. However, delays to implementation and complaints that the switch is leading to financial hardship have caused controversy.

Universal credit is paid monthly to those who are out of work, as well as to people in work but on low incomes. It replaces the following benefits:

- Child tax credit

- Housing benefit

- Income support

- Income-based jobseeker’s allowance (JSA)

- Income-related employment and support allowance (ESA)

Working tax credit

Relying on the state benefit system to provide an adequate safety net if you lose your job or you are too ill to work is generally unwise.

It is designed to provide a basic standard of living and may not cover your mortgage or full rental payments. The amount paid under universal credit will depend on a range of factors, including your housing costs, number of children, other earnings or savings, and whether you have an existing disability.

 

GREATER PROTECTION

The good news is that insurance can bridge the gaps in your financial security if you lose your job, become too ill to work or die.

Term life insurance is the most basic type of life insurance. It pays out if the policyholder dies before a set date – usually retirement, or the end of a mortgage term. This is often a cost-effective option, because premiums are low as the chances of claiming are relatively low. However, should the worst happen, the lump sum can help ease financial worries at a difficult time.

Critical illness insurance pays a fixed lump sum payment if you are diagnosed with a specified serious illness, including most types of cancer, stroke and heart disease.

Income protection insurance pays a monthly amount – usually a fixed portion of your regular earnings – if you cannot work because of illhealth.

This normally only pays out after you have stopped work for a certain period of time.

Such protection can cover your mortgage payments as well as other essential bills. All these policies can be purchased by individuals, but some employers also provide cover.

The government recently confirmed that any payment from these insurance policies won’t affect your entitlement to state benefits such as universal credit. If you are concerned about potential consequences for your income if you fall ill, please get in touch.

 

Image Courtesy of Flickr_Ishan Manjrekar

Landlords losing interest

The next step in changes to tax relief for landlords takes effect from 6 April 2019.

If you have a mortgage on a buy to let residential property, from this April only 25% of the interest can be offset against your rental income, with the remaining 75% qualifying for a 20% tax credit only.

For a higher rate taxpayer, that will mean £50 less tax relief for every £1,000 of interest in 2019/20. And from April 2020 onwards, you will only receive a 20% tax credit – another £50 cut in relief for every £1,000 of interest for 40% taxpayers.

If these changes make you think about selling up, then remember another April 2020 change: capital gains tax at up to 28% on residential property will be due within 30 days of sale.

The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice and some buy to let mortgages. For specialist tax advice please refer to an accountant or tax specialist.

 

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